Analysis by an industry leader has examined how the type of borrower affects the likelihood of a mortgage default

The popularity of variable rate home loans is at a nine-month high, according to research by Mortgage Choice.

Demand for variable rate loans is at 82% overall, with Western Australia seeing the biggest rise, followed by Queensland, Victoria and NSW. South Australia was the only state to see a drop in popularity, falling to 78% in June.

Mortgage Choice is attributing the surge to recent rate cuts, as borrowers take advantage of record low interest rates.

"The end of the financial year brought with it an air of optimism around the direction of interest rates as a growing number of home loan borrowers, more than one in four, chose variable rates,” said spokesperson Belinda Williamson.

In comparison, fixed rates continued to fall in popularity. The research revealed the current average fixed-rate loan was at 6.22%, while the average standard variable was at 6.79%. However, it was possible for borrowers to “negotiate a discount on their standard variable interest rate - to below 6% in some instances", said Williamson.

She added that speculation of a further drop in rates, after July’s unchanged rate, could build confidence further.

“Perhaps the whisper of one more rate cut in coming months is wielding influence," she said.